LEGAL ALERT AUGUST 2016 SSEK Legal Alert is a monthly publication of SSEK, Indonesian Legal Consultants. SSEK s lawyers, advisors and associates provide a wide range of legal services to Indonesian and multinational corporations, banks, joint ventures and other organisations. SSEK Legal Alert is a monthly survey designed to keep our clients up to date with the latest legal developments in Indonesia. To subscribe, visit our website: www.ssek.com. * * * agrarian, land and spatial layout Minister of Agrarian Affairs and Spatial Planning/Head of National Land Affairs Agency Regulation No. 24 of 2016, dated July 27, 2016, regarding Standards of Service and Agrarian Arrangements, Spatial Planning and Land Matters in Special Economic Zones. This Regulation covers service standards for agrarian matters in special economic zones, including services related to the management, granting, extending and renewal of Right to Build (Hak Guna Bangunan) and Right to Use (Hak Pakai) titles. This Regulation came into force on the date of its enactment. Minister of Agrarian Affairs and Spatial Planning/Head of National Land Affairs Agency Regulation No. 17 of 2016, dated April 14, 2016, regarding Land Management in Coastal Areas and on Small Islands. This Regulation covers the administration of land in coastal area and on small islands, including the mechanism for the granting of right over land, limitations on land ownership, use and utilization. It came into force on the date of its enactment. banking Financial Services Authority ( OJK ) Regulation No. 25/POJK.03/2016, dated July 15, 2016, regarding the Amendment of OJK Regulation No. 27/POJK.03/2015 regarding Bank Business Activity in the Form of Trust. This Regulation amends one provision of the previous regulation, namely Article 20(1) letter a, whereby the Settlor can now be a corporation or individual customer. This Regulation came into force on the date of its promulgation. OJK Regulation No. 32/POJK.03/2016, dated August 12, 2016, regarding the Amendment of OJK Regulation No. 6/POJK.03/2015 regarding Transparency and Publication of Bank Reports. This Regulation was issued to improve market discipline and to conform to practices in the international market, and amends several provisions of the previous regulation. Changes include (i) moving responsibility for the completeness and accuracy of Monthly Publication Reports, Quarterly Publication Reports, Annual Publication Reports and other Publication Reports to the Board of Directors and Board of Commissioners of banks; (ii) amending the minimum points to be incorporated in the Quarterly Publication Report; (iii) requiring the addition of quantitative information on risk exposure in the Quarterly Publication Report as of the end of June each year (this requirement is effective beginning June 2017); and (iv) requiring disclosure of Liquidity Coverage Ratio ( LCR ) in the Quarterly Publication Report for banks that are required to prepare and publish LCR reports (this requirement is effective from September 2016). This Regulation came into force on the date of its promulgation. SSEK legal alert 1
capital markets OJK Regulation No. 29/POJK.04/2016, dated July 29, 2016, regarding Annual Report of Issuer or Public Company. Pursuant to the transitional provision of this Regulation, Bapepam-LK Regulation No. X.K.6 will no longer apply beginning January 1, 2017. This Regulation governs, inter alia, the form, contents and submission of annual reports of issuers and public companies, as well as sanctions for non-compliance with the Regulation. It came into force on the date of its promulgation. communication and information technology Ministry of Communication and Information Technology Regulation No. 11 of 2016, dated July 20, 2016, regarding the Classification of Interactive Electronic Games. The stated aim of this Regulation is to protect the public from the misuse of electronic information. To avoid such misuse, the government intends to classify interactive electronic games based on their content and the intended age of users, with games required to meet certain criteria in accordance with their classification. Application for classification is voluntary by game operators. The Regulation is silent as to sanctions if games do not meet the established criteria according to their classification. It came into effect on the date of its promulgation. energy and mineral resources Government Regulation No. 28 of 2016, dated July 14, 2016, regarding Geothermal Production Bonus Amount and Payment. This Regulation stipulates that the Production Bonus must be paid to the regional government where the working area is located as of the first commercial production. The bonus amount shall be equivalent to 1% of gross income from the sale of geothermal steam or 0.5% of gross income from the sale of electricity. This Regulation came into force on the date of its promulgation. Minister of Energy and Mineral Resources ( MEMR ) Regulation No. 22 of 2016, dated August 4, 2016, regarding the Construction of Domestic Small-Scale Oil Refinery. This Regulation provides the legal basis for the construction of oil and/or condensate refineries and their supporting facilities with a maximum capacity of 20,000 barrels of oil per day. The construction of a Small-Scale Oil Refinery must be based on a downstream Processing Business License. A Small-Scale Oil Refinery may be constructed within or outside a Cluster, which refers to an area comprising one or more closely located upstream working areas (to be stipulated by the Directorate General of Oil and Gas with a recommendation from the Chairman of SKK Migas). Construction of a Small-Scale Oil Refinery within a Cluster may be done by the Government (through assignment to PT Pertamina (Persero)) or a Business Entity by selection, while construction outside a Cluster shall be carried out by a Business Entity pursuant to downstream laws and regulations. This Regulation also covers the supply and pricing of materials for the construction, the purchase of the production of Small-Scale Oil Refineries, and the fulfillment of domestic needs. This Regulation came into force on the date of its promulgation. SSEK legal alert 2
steel, ceramics, glass and rubber gloves industries. This Regulation also lays down the procedure for certain natural gas consumers to apply for a special gas price. This Regulation came into force on the date of its promulgation and applies retroactively to January 1, 2016. finance Bank Indonesia ( BI ) Regulation No. 18/11/PBI/2016, dated July 29, 2016, regarding Money Market. As its name suggests, this Regulation governs the money market, which is essentially part of the financial system for trade, borrowing and lending, and short-term funding for a maximum of one year, whether in Rupiah or a foreign currency. This Regulation covers activities, instruments, licensing, benchmark prices, prudential principles and risk management, infrastructure, and reporting in the money market. It revokes Decision of the Directors of Bank Indonesia No. 21/55/KEP/DIR, dated October 27, 1988, regarding Money Market and Inter- Bank Fund Placement, and Bank Indonesia Circular Letter No. 21/32/UPG, dated October 27, 1988, regarding Money Market and Inter-Bank Fund Placement. This Regulation came into force on August 31, 2016. BI Circular Letter No. 18/16/DSta, dated July 27, 2016, regarding the Fourth Amendment of BI Circular Letter No. 11/2/DSM, dated January 22, 2009, regarding Commercial Bank Monthly Report. This Circular Letter amends the report format and reporting procedures for the monthly reports of commercial banks. It came into force for July 2016 reports submitted in. Ministry of Finance ( MOF ) Regulation No. 123/PMK.08/2016, dated August 8, 2016, regarding the Amendment of MOF Regulation No. 119/PMK.08/2016 regarding Procedures for the Repatriation of Taxpayer Assets to the Territory of the Republic of Indonesia and the Investment of Repatriated Funds in the Financial Market in the Framework of the Tax Amnesty. Taxpayers with property located abroad may direct such property, in the form of funds, into special accounts in a bank designated by the Minister of Finance, with these funds later to be used as an investment in the Republic of Indonesia. This Regulation covers the type and form of such investments. It entered into force on the date of its enactment. MOF Regulation No. 124/PMK.02/2016, dated August 8, 2016, regarding Technical Accounting Instructions for Non-Tax State Revenue from the Upstream Oil and Gas Business. This Regulation covers technical accounting instructions for the recognition, measurement, presentation and disclosure of elements in financial statements. The technical instructions in this Regulation shall be used by Working Units, Implementing Authorities, the State Treasurer, and other related institutions. Detailed technical instructions are further provided in the attachment of this Regulation, which entered into force on August 9, 2016. MOF Regulation No. 121/PMK.05/2016, dated July 26, 2016, regarding Procedure for the Withdrawal of Extended Offshore Loans to State-Owned Enterprises and Regional Governments. Under this Regulation, an offshore loan is categorized as any debt financing obtained by the Government from a lender by loan agreement and not in the form of government securities, which is to be repaid under agreed terms. The withdrawal of extended offshore loans may be conducted through direct payment, pre-financing, letter of credit and special account. It revokes MOF Regulation No. 216/PMK.05/2009 and came into force on July 27, 2016. SSEK legal alert 3
OJK Regulation No. 24/POJK.04/2016, dated June 29, 2016, regarding Securities Brokerage Agencies. Securities Brokers can be an individual or entity and must first register with the OJK. This Regulation covers, inter alia, registration procedures and the required documents for registration, cooperation agreements between Securities Trading Brokerage Agencies and Securities Trading Broker Agents, and obligations and prohibitions applicable to Securities Trading Brokerage Agents. This Regulation came into force on the date of its promulgation. OJK Regulation No. 26/POJK.04/2016, dated July 25, 2016, regarding Capital Market Investment Products for the Purpose of Supporting the Tax Amnesty Law. This Regulation was issued to accommodate funds repatriated under the Tax Amnesty Law in capital market investment instruments. Under this Regulation, when opening a securities account for the purpose of investing in designated types of investments, the investor must submit at least a Tax Amnesty Decision Letter to the Financial Services Provider. This Regulation contains restrictions on the management of investor funds by Investment Managers, and stipulates that the registration statement for the public offering of assetbacked securities shall take the form of a Participation Letter. This Regulation came into force on the date of its promulgation. OJK Regulation No. 27/POJK.03/2016, dated July 27, 2016, regarding Fit and Proper Test for the Main Party in a Financial Institution. This Regulation governs fit and proper tests for prospective owners, managers, supervisors and/or parties with significant control over a Financial Institution (namely a bank, securities company, investment advisor, insurance company, pension fund, financing company, guarantee institution, venture capital company or pawnbroker company). Article 2 of this Regulation elaborates on the main parties in each financial institution subject to a fit and proper test. This Regulation revokes several provisions of OJK Regulation No. 4/POJK.05/2013 regarding Fit and Proper Test for the Main Party in Insurance, Pension Fund, Financing, and Guarantee Companies, but other pertinent regulations regarding fit and proper tests in the financial services sector still apply insofar as they do not contravene provisions of this Regulation. This Regulation entered into force on August 1, 2016, for financial institutions other than pawnbroker companies, and enters into force two years from July 27, 2016, for pawnbroker companies. OJK Regulation No. 30/POJK.04/2016, dated July 29, 2016, regarding Sharia- Based Real Estate Investment Fund. This Regulation governs Sharia-based real estate investment funds, the Indonesian equivalent of real estate investment trusts, hereinafter referred to as Sharia-based DIRE. Article 4 of this Regulation provides that Shariabased DIRE are subject to the pertinent capital market regulations unless stipulated otherwise under this Regulation. This Regulation also governs special provisions to be reflected in the collective investment contract of the concerned Sharia-based DIRE, the management of Sharia-based DIRE, and relevant sanctions for non-compliance with this Regulation. It came into force on the date of its promulgation. OJK Regulation No. 31/POJK.05/2016, dated July 29, 2016, regarding Pawnbroker Business. The OJK, which has the power to regulate and supervise non-bank financial institutions, has issued a Regulation for the pawnbroker business. Pawnbroker companies can be in the form of a limited liability company or cooperative, and only the Indonesian government, regional governments, and Indonesian citizens and/or entities can hold shares in the companies. A pawnbroker company cannot be owned by a foreign citizen/entity, whether directly or indirectly, unless the direct ownership in such company is through the stock exchange. This Regulation also governs the minimum capitalization, licensing procedures, periodical reporting, supervision, and merger, acquisition, consolidation and spin-off of pawnbroker companies. The standard forms for the licensing and registration of pawnbroker companies can be found in the attachments of this Regelation, which came into force on the date of its promulgation. SSEK legal alert 4
general corporate Government Regulation No. 29 of 2016, dated July 14, 2016, regarding the Amendment of Authorized Capital for Limited Liability Company. This Regulation amends the required authorized capital of limited liability companies, which was previously set out under Law No. 40 of 2007 regarding Limited Liability Company. Now the founders/ shareholders of a limited liability company are free to decide on the amount of authorized capital. A minimum of 25% of the authorized capital must still be issued and fully paid up. However, limited liability companies in certain fields must still comply with the authorized capital requirements in the relevant regulations. This Regulation came into force on the date of its enactment. intellectual property Minister of Law and Human Rights No. 8 of 2016, dated February 24, 2016, regarding Requirements and Procedures for Registering Intellectual Property License Agreement. This Regulation provides the requirements for applicants to register license agreements covering copyright and related rights, patents, brands, industrial designs, integrated circuit layout design, and trade secrets. This Regulation came into force on the date of its enactment. manpower Minister of Manpower ( MOM ) Regulation No. 21 of 2016, dated June 27, 2016, regarding Decent Living Standards. Decent Living Standard, as a component for determining regional minimum wages, consists of a number of standard living expenditures including food, clothing, housing, education, healthcare, transportation and recreation, reflecting the standard of living for individual employees over the course of one month. This Regulation came into force on the date of its enactment. MOM Regulation No. 23 of 2016, dated July 12, 2016, regarding Procedures for the Imposition and Revocation of Sanctions in the form of Suspension of Access to Certain Public Services for Employers Excluding State Officials. This Regulation limits public services for employers who fail to comply with the provisions on the mandatory participation in the social security program for workers. It sets out the procedures for coordinating and evaluating the revocation of public services access. This Regulation came into force on the date of its enactment. Health Social Security Organization Regulation No. 2 of 2016, dated June 21, 2016, regarding Procedures for Monthly Social Security Payment and Penalty Payment as a Result of Late Monthly Social Security Fee Payment. This Regulation sets out the mechanisms related to the above including the documents required, time limits and calculations. It came into force on July 1, 2016. SSEK legal alert 5
tax, excise and state income Government Regulation No. 34 of 2016, dated August 8, 2016, regarding Income Tax for Income from Transfer of Rights Over Land and/or Buildings, and Binding Sale and Purchase Agreement of Land and/or Building and Its Amendment. This applies for parties engaging in business involving the transfer of land and/or buildings, and parties that earn income by acting as a seller of land and/or buildings or by acting as a buyer in a Binding Sale and Purchase Agreement. It sets out income tax rates, divided into three categories depending on the type of transfer of land and/or building, and stipulates the conditions for the exclusion of income tax. This Regulation revokes Government Regulation No. 71 of 2008 on the same matter. It comes into force on September 7, 2016. Directorate General of Customs and Excise Regulation No. PER-36/BC/2016, dated August 16, 2016, regarding Notification of Delivery of Finished Dutiable Goods, which revokes Directorate General of Customs and Excise Regulation No. PER-55/ BC/2012 regarding the same. This Regulation applies to manufacturers of certain goods including alcoholic drinks and tobacco products. It stipulates when such goods are considered finished and the manufacturers are required to notify the Directorate General of Customs and Excise. This Regulation came into force on its date of enactment. trade Minister of Trade Regulation No. 44/M-DAG/PER/6/2016, dated June 27, 2016, regarding Provisions on Counter-Purchase (Imbal Beli) Provisions for the Importation of Goods for Public Procurement. Counter-purchase is a method of payment that requires foreign suppliers to buy and/or market certain Indonesian export commodities as payment for all or some of the value of goods obtained from such foreign supplier. The determination of goods and the percentage of counter-purchase required will be determined by a counter-purchase team formed by the Minister of Trade. This Regulation contains provisions regarding counter-purchase mechanisms and requirements, and came into force on the date of its enactment. Minister of Trade Regulation No. 48/M-DAG/PER/6/2016, dated June 30, 2016, regarding Delegation of Authority to Issue Company Registration Certificate to the Head of the Commercial Body in the Batam Free Trade and Free Port Zone, the Head of the Commercial Body in the Bintan Free Trade and Free Port Zone, the Head of the Commercial Body in the Karimun Free Trade and Free Port Zone, and the Head of the Commercial Body in the Sabang Free Trade and Free Port Zone. With this Regulation, the Minister of Trade delegates its authority to issue Company Registration Certificate (Tanda Daftar Perusahaan or TDP ) in the Batam, Bintan, Karimun and Sabang free trade and free port zones to the Commercial Body heads of the respective zones. Issued TDPs must be copied to the Director General of Domestic Trade. The Regulation comes into force six months after its enactment. Minister of Trade Regulation No. 49/M-DAG/PER/6/2016, dated July 27, 2016, regarding Minister of Trade Regulation No. 48/M-DAG/PER/6/2016 regarding the Delegation of Authority to Issue Company Registration Certificate to the Head of the Commercial Body in the Batam Free Trade and Free Port Zone, the Head of the Commercial Body in the Bintan Free Trade and Free Port Zone, the Head of the Commercial Body in the Karimun Free Trade and Free Port Zone, and the Head of the Commercial Body in the Sabang Free Trade and Free Port Zone. This Regulation came into force on the date of its enactment. SSEK legal alert 6
transportation Ministry of Transportation Regulation No. PM 85 of 2016, dated August 5, 2016, regarding Components of the Compensation Cost Paid by the Government in the Implementation of Sea Freight. This Regulation provides the specific components to be paid by the government in the implementation of sea freight, which encompasses direct operational costs and indirect operational costs. It came into effect on the date of its promulgation and is retroactive to January 1, 2016. Ministry of Transportation Regulation No. 87 of 2016, dated August 5, 2016, regarding Procedures for Granting a License to Build an Airport and Approval for Airport Development. This Regulation governs the requirements and procedure for obtaining a license to build a public airport, which is an airport that is used to serve the public interest. It also sets forth the requirements and procedure to obtain approval for airport development. This Regulation came into force on the date of its promulgation. SSEK legal alert 7